Why Token Approvals Are the Silent Risk in Your Multichain Wallet—and How to Fix Them

Okay, so check this out—I’ve been in DeFi long enough to know that the flashy rug pulls grab headlines. But honestly? token approvals are the thing that quietly eats your funds. Whoa! At first glance approvals look like a trivial UX step: click, confirm, done. My instinct said “meh,” for a while. Then one careless allowance turned a six-figure position into a nightmare. Something felt off about how most wallets surface approvals, somethin’ small but critical—it’s a permissions UI that’s over-friendly and under-explanatory, very very important to fix.

Here’s the thing. Users grant unlimited allowances all the time. Really? Yes. They do. A lot of dapps ask for ERC-20 unlimited approvals to save gas on repeated transfers, and people accept because, well, approving forever is faster. On one hand it reduces gas spend and friction. Though actually—wait—on the other hand, it opens a persistent, high-risk attack surface: any vulnerability in the approved contract, or any private key compromise, can drain tokens indefinitely. Initially I thought the tradeoff was acceptable for power users, but then patterns emerged that made it feel reckless for everyone.

Let me walk through three practical layers of defense that actually work in the wild: manage approvals proactively, harden wallet setup, and optimize gas without surrendering security. These aren’t theoretical. They’re things I’ve tested, broken, patched, and then used again. Some of it is polished; some parts still annoy me (UI makers, I’m looking at you). I’ll give actionable steps plus the mental model so you know when to be cautious—and when to accept the small risk.

Why unlimited approvals keep biting users

Short answer: convenience beats caution. Long answer: the ERC-20 approval pattern gives a spender the right to transfer your tokens up to an allowance. If you set that to a very high number—or to the max uint256—you’ve effectively handed long-term custody rights to that contract address. That makes sense for recurring interactions. But many dapps are audited poorly or integrate third-party contracts. If any of those contracts are compromised, the attacker can sweep funds. Hmm… scary, right?

Imagine a marketplace you use occasionally. You approve unlimited spend to save on gas. Months later, you stop using it. The contract gets an upgrade with a bug, or a private key for a deployer leaks, or an LP migrator pulls a malicious token. Bam. Your tokens go. On the technical side, approvals are global per token per spender, not per function or per transfer. The blockchain doesn’t ask “should this contract still have rights?” It just honors the allowance until you change it.

So what can you do? Start by treating approvals like passwords. Revoke or minimize them. Use per-transaction approvals when possible. But there is nuance—because gas costs and cross-chain messaging make per-transaction approvals painful. That’s where smarter tooling and UX can help.

Practical approval management for the power user

This is the checklist I run through when I set up or audit a wallet. Short checklist items first. 1) Revoke old approvals. 2) Limit allowances. 3) Use spender aliases. 4) Leverage multisig and session keys.

Step one: discover. Use on-chain explorers and wallet features to list token approvals for a given address. Most savvy multisig UIs and modern wallets show allowances. If you don’t see them, dig—because if you can’t find them, they still exist. Step two: minimize. Approve exact amounts, or small caps tied to the activity. Step three: time-box approvals. If a dapp only needs a handful of interactions, set a short expiry in off-chain tooling or use a session contract that you disable later.

Okay, so that’s simple in theory. But two problems crop up: the UX friction for repeated approvals, and the gas cost. People resent re-approving. They will choose convenience. That’s human. So think about smart compromises: give one-time approvals for large sums only to audited, reputable protocols; otherwise, force per-action approvals. Wallets can make this easier by batching approvals with other transactions, or by suggesting safe defaults. I’m biased toward defaults that protect people, even if it means an extra click.

Hardening the wallet: keys, sessions, and UX

Start with key hygiene. Use hardware wallets for the main funds. But wait—hardware isn’t a silver bullet for approvals across chains. If you use a hardware device with a hot session key (like a connected browser extension), an attacker who tricks you into enabling a malicious dapp could still get approvals signed. So use session keys with limited scopes. Seriously?

Yes. Session keys are great. Create a delegate key that has restricted allowances and a cap on token types. Revoke it when done. Multisig setups are also invaluable for treasury-level balances—requiring multiple signatures kills lone-exploits. And for everyday small balances, invest in a mobile or burner wallet: keep a small float for risky interactions and keep the rest cold. This stratification reduces blast radius.

Here’s a practical pattern I use: main hardware + multisig for core assets; secondary hot wallet for day-to-day interactions; ephemeral session keys for single dapp sessions. It sounds like overkill. But once you lose something, you won’t think it’s overkill. Oh, and by the way, document your allowances periodically—it’s boring, but it saves panic.

Gas optimization that doesn’t cost you security

People optimize gas by approving once and reusing approvals. That saves money. There are less obvious strategies that preserve security. For example, meta-transactions and gas relayers can abstract gas payments away from users while still using per-transaction approvals. Layer 2s and optimistic rollups lower per-interaction costs, making per-action approvals realistic. Also, using permit-style approvals (EIP-2612) lets you sign off-chain and avoid an on-chain approval transaction entirely. This is elegant because you grant a one-time permission with a signed message, and the dapp spends only what you signed for.

But not every token supports permit. So what then? Try batching and smart contract wallets. A smart contract wallet can implement internal allowances and approval logic that is more granular than ERC-20. It can also recover or pause approvals. The tradeoff is complexity: contract wallets require careful auditing and have their own risk surfaces. Initially I resisted them. Then I set one up and found the extra control worth the effort. I’m not 100% sure every user needs one, but power users and treasury managers definitely benefit.

Tooling and automation: the friend you need

There are tools that track approvals and alert you when a dapp has an allowance on your tokens. Use them. Seriously. Notifications let you act fast. Automation can revoke allowances based on rules—like “revoke if unused for 90 days”—and that is a huge win for reducing exposure. Some wallets and third-party services already do this. I recommend checking out modern wallet features that include approval dashboards (I found a lot of value hopping between solutions).

One natural place to start is wallets that prioritize security and clear approval UX. They guide you through the permissions model and make revocation easy. For a solid starting point, I’ve been recommending wallets that focus on proactive approval management. Check out https://rabbys.at/ for a look at how some wallets expose approvals and offer granular controls—it’s not the only option, but it shows how the UX can reduce risk without breaking usability.

To wrap up—well, not really wrap up, but to land this—think of approvals like a standing order on your bank account. You wouldn’t give every vendor perpetual access. So why do it on-chain? Be intentional. Limit allowances. Use session keys and multisigs. Favor permit flows and L2s when possible. And don’t forget to check your dashboard. I’m biased, sure. But after seeing what careless approvals do, I prefer slightly more friction and a lot less regret. Keep your funds stratified, monitor often, and teach newcomers that the “Confirm” button is not a suggestion—it’s permission.